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Life Insurance Article Series Written By Kyle J. Norton
1. Characteristics of Term Insurance
Increasing term insurance might be employed in situations where the liability being protected against is both temporary and increasing; for example, such a policy might be used to protect the value of a key employee in an organization, where the employee's salary is expected to increase every year. With this type of policy, the annual premium generally increases in step with the increases in the face amount of insurance coverage.
2. Types of Life Insurance
Term insurance is the oldest form of life insurance. In the term insurance policies, the insurance company promises to pay the sum insured, if the life insured dies within the period specified in the policy; if the life insured is alive at the end of the period, the policy terminates on that date and the life insurance protection ceases.
3. Term Insurance
Term insurance policy is the oldest and popular form of life insurance. Under term insurances, the insurance company promises to pay the sum insured, if the life insured dies within the period specified in the policy (5, 20, 15, 20 year term insurances) if the life insured is alive at the end of the period, the policy terminates on that date and the life insurance protection ceases.
4. Whole Life Insurance and Cash Surrender Value
Under whole life insurance, the premium would be more than enough to cover the risk; the difference would be invested to form policy reserves, to subsidize what would otherwise be an inadequate premium in the later years: This concept still remains the basis for calculating premiums for all permanent insurance contracts.
5. Characteristics of Universal Life Insurance
Participating The policy owner shares with the insurer in some of the risks and rewards associated with the expenses and mortality gains/losses associated with life insurance underwriting. Participating policies entitle the policy owner to a return on investment in the form of dividends.
6. What is Universal life Insurance
Unlike term and whole life insurances, this policy blends term insurance and an investment account into one contract. Also its premiums can be increased or decreased, paid when due or at unscheduled dates, or stopped entirely and restarted at the owner's will provided the policy value is adequate to maintain the cost of the insurance.
7. Characteristics of Universal Life Insurance
The cash surrender value of a universal life plan is the current account value, less outstanding loans and surrender charges. Surrender charges are usually based upon a multiple of the minimum required premium for the policy back-end charges are larger than front-end charges.
8. Understand the Cost and Mortality Components of Universal Life Insurance
Level cost of insurance A popular alternative to the YRT is the Level COI structure where the cost of insurance is scheduled to remain constant throughout the duration of the policy. The main benefit of this plan is that, although cash values are lower in the early policy years, the policy performs well if clients want safe for retirement. Since UL contracts are long-term protection vehicles, the later higher values are desirable
9. Types of Coverage of Universal Life
This plan is designed to provide life insurance coverage for more than one life. A death benefit is paid each time an insured dies. Each insured life can be insured for a different face amount.
10. Types of Death Benefit of Universal Life
This death benefit option pays out the balance of the cash value or accumulating fund along with the initial death benefit amount. This option provides a cost-effective means of providing clients with increasing life insurance coverage.
11. What is the Minimum & Maximum Premiums in Universal Life Insurance
Maximum premiums are usually only a factor in the first policy year. In subsequent years, usually the only restriction is that the fund value or cash value of the plan be kept below the exempt line. Therefore, beyond the first year, maximum policy deposits vary with many factors such as credited rates, past deposits, etc. as long as they do not force the policy to become non-exempt.
12. Understand Investment Options of Universal Life Insurance
Guaranteed Investment Accounts. These type of accounts are available from daily interest accounts to 10 or 20 year guaranteed interest accounts. They appeal to risk-averse clients who would like to see a steady guaranteed growth within their UL plans without being worried of the fluctuation of the stock market. They are much less risky than Indexed Accounts but they also offer less potential return.
13. The advantage and Disadvantage of Universl Life Insurance
Most UL plans allow the policyholder to allocate deposits in a way that matches their risk philosophy. Such a plan may change its investment allocation as the policyholder gets older, negating the need for the policyholder to monitor the UL investment mix to ensure that it is consistent with the policyholder's investment philosophy as that changes.
14. What is Investment Bonus In Universal Life Policy
Investment bonuses are special rider guaranteed by the insurance companies for UL policy that have not existed in any other types of life insurance. As insurers are being forced to increase their COI charges to maintain product profitability, another way to make UL products more attractive for clients is to add or enhance investment and interest bonuses.
15. Understand Life Insurance Surrender Charge
Surrender charge schedules are difference between insurers and between the UL plans available from each insurer. Some plans contain a very heavy level of surrender charges that apply for a lengthy period of time of more than 10 years. These charges serve to artificially suppress the cash values of the policy. Other plans have low or no surrender charges at all.
16. Understand The Benefit and Riders of Universal Life Insurance
Term riders are additional inexpensive term insurances added by policy holder to the UL policy. They are inexpensive insurances protection for anyone insured by a UL plan. They can also provide the insured lives with additional investment room within a UL plan for exempt testing purposes at a reasonable cost.
17. When is the Best Time to Buy Universal Life Insurance
Most people become aware of their insurance needs shortly after their marriage. A low-cost plan is often required since young couples seldom have large amounts of disposable income. The UL policy allow them to deposit more funds into their plan to fund their future needs.
18. Tax Exempt vs Non Exempt Universal Life Policies
An exempt policy can become non-exempt in the future if it fails the exempt test at any anniversary, but fortunately, most insurance companies put contractual provisions in their UL plans that guarantee the insurer will take all necessary steps to make sure that the policy remains exempt.
